Liquid Death's Profitability Under Scrutiny Amidst 10% Donation Claims

Liquid Death, the canned water brand known for its edgy marketing and rapid growth, is facing public scrutiny over its long-standing claim of donating 10% of profits to combat plastic pollution. A recent social media post by "Boring_Business" highlighted the discrepancy, stating, "Liquid Death claims that they donate 10% of profits on every can of water they sell. Turns out the company has donated $0 so far because they have never turned a profit on the business P&L." This assertion has sparked debate regarding the company's financial transparency and the efficacy of its charitable pledges.

The company has consistently leveraged its environmental commitment, packaging water in aluminum cans as an alternative to plastic bottles and prominently featuring its 10% profit donation pledge. This strategy has contributed to its valuation reaching $1.4 billion as of March 2024, following significant funding rounds. Liquid Death's unique brand identity, founded by former Netflix creative director Mike Cessario, has resonated with consumers, driving substantial revenue growth, from $45 million in 2021 to $263 million in 2023.

Despite its impressive revenue figures and high valuation, Liquid Death has historically operated at a loss. Financial highlights shared with investors during its October 2022 Series D funding round indicated the company was unprofitable in 2022, reporting "slim gross profits—roughly 12%—versus a typical beverage company’s targeted 50%." At that time, the company projected achieving profitability by 2024. The "Boring_Business" tweet directly references this past unprofitability as the reason for a lack of donations, noting, "This is equivalent to an unemployed person claiming they donate 100% of their salary lmao."

The controversy gained traction after podcaster Tim Pool publicly questioned Liquid Death's donation claims, citing archived versions of their website that stated, "We donate 10% of profits from every can sold to help kill plastic pollution." While Liquid Death has partnered with environmental organizations like 5 Gyres and Thirst Project, the tweet suggests that the absence of overall company profitability would logically preclude significant profit-based donations. The company has also engaged in specific campaigns, such as donating 50% of proceeds from Tony Hawk skateboards to charities including 5 Gyres and The Skatepark Project.

Liquid Death's business model relies on transforming a commodity product into a premium lifestyle brand through distinctive packaging and irreverent marketing. While the company has expanded its product lines and distribution, its financial trajectory towards sustained profitability remains a key point of interest for investors and consumers alike, particularly in light of its public commitment to charitable giving tied to its profits.